Who Signs As the Remitter on a Money Order?
- Banks and other financial firms sell money orders to consumers and businesses. The entity that issues a money order has the responsibility to honor the item because money orders are obligations of the issuer rather than the purchaser. Conversely, if you write a personal check, you have the obligation to pay the debt since personal checks are drawn against your own funds.
Money orders, while not obligations of the purchaser, contain the name of the remitter so that the payee knows who bought the money order. Furthermore, including the name of the remitter on the money order enables the issuer to identify the person whose funds were used to buy the instrument.
- Every state has its own laws pertaining to negotiable instruments such as money orders. In the state of Wisconsin, if no one negotiates a money order within two years of the purchase date, then the person whose name appears as the remitter can obtain a full refund from the issuer by surrendering the money order. Thereafter, the issuer has no obligation to the payee, remitter or any other party with regard to the money order. Therefore, if you let someone else sign as the remitter, then that person rather than you can get a refund if the payee never negotiates the money order. Other states have similar laws that tend to protect the remitter's rights.
- Banks keep records of money order purchases and allow purchasers to place stop payments on money orders that become lost or stolen. Since banks typically do not require you to sign a money order at the time of purchase, a bank has no way of knowing whether you or someone else signed as the remitter. You simply provide the bank with your name, the money order number and issue amount, and the bank places the hold on the item.
- Most state's banking laws are based on the Uniform Commercial Code, which was created by lawyers from around the United States to act as a guide for inter-state commerce. The code includes very little information about remitters in terms of liability and rights. Some criminals take advantage of this by listing false names on money orders and cashier's checks to make it harder for authorities to prosecute them for fraud. Consequently, many banks only issue money orders with face amounts of $1,000 or less and require people who need larger negotiable instruments to buy cashier's checks. Banks pre-print the name of the purchaser of a cashier's check into the remitter field and this resolves issues related to the identity of the remitter.